The foreign exchange markets

                         Министерство образования и науки РФ

Федеральное государственное бюджетное  образовательное учреждение

                   высшего   профессионального   образования

 

Новгородский  государственный университет имени  Ярослава Мудрого

                            Институт экономики и управления

             Кафедра иностранных языков (экономическая секция)

 

 

 

 

 

                                          РЕФЕРАТ

                           По дисциплине: «Английский язык»

   

           На тему:  «The foreign exchange markets»

 

 

 

 

 

Выполнила:

студентка гр. 0631

Дзукаева  С.В

 

Проверила:

ст. преподаватель

Лебедева  Е.А.

                                   

                                    Великий Новгород

                                               2012

                                                  

                              Содержание:

 

 I. Введение...………………………………………………..3

II. Оригинал

1. The structure of the foreign exchange market……………..4 

2. The functions of the international currency market...……...4

3. Classification of foreign exchange markets………………..5

4. The participants of the foreign exchange markets….……...7

5. Instruments of the foreign exchange markets……………... 8

6. Foreign exchange rates…………………………………………..9

7. Factors affecting foreign exchange rates……………………9

III. Перевод………………………………………………….10

1. Структура  валютного рынка …………………………….10

2. Функции международного валютного рынка..................10

3. Классификация валютных рынков ……………………...13

4. Участники валютных рынков ……………………...........14

5.Инструменты  валютных рынков…………………………….

6.Валютные  нормы………………………………………….16

7. Факторы, затрагивающие валютные нормы……………16

IV. Заключение………………………………………….......18

Glossary………………………………………………………19

VI.Список используемой литературы…………………...22

 

 

 

 

 

 

 

 

 

 

                                                    I. Введение.

            Торговля и платежи через национальные границы требуют, чтобы одна из сторон, участвующих в сделке заключила контракт, чтобы заплатить или получить фонды в иностранной валюте. В некоторой стадии одна сторона должна преобразовать внутренние деньги в иностранные. Кроме того, хорошо осведомленные инвесторы, базируемые в каждой стране, знают о возможностях закупки активов или продажи долгов, называемых в иностранных валютах, когда ожидаемые возвращения выше за границей или когда затраты интереса ниже. Эти инвесторы также должны использовать валютный рынок всякий раз, когда они инвестируют или заимствуют за границей.

Валютный рынок - это сфера экономических отношений, проявляющихся при осуществлении операции по купле-продаже иностранной валютой и ценных бумаг в иностранной валюте, а также операций по инвестированию валютного капитала. Это наибольший рынок в мире в терминах объема сделок. То, что объем валютной торговли во много раз больше, чем объем международной торговли и инвестиций отражает, что различие должно быть сделано между сделками, которые вовлекают только банки и те, которые вовлекают банки, людей, и фирмы, вовлеченные в международную торговлю и инвестиции.

Феноменальный взрыв деятельности и интереса на валютных рынках отражает в большой мере желание самосохранения фирмами, правительствами, и людьми. Поскольку международная финансовая система переместилась все более  и более к свободному плаванию обменных курсов, цены на валюту стали  значительно более изменчивыми. Риски закупки и продажи долларов и других валют увеличились заметно  в последние годы. Кроме того, колебания в ценах иностранных  валют затрагивают внутренние экономические  условия, международные инвестиции, и успех или отказ правительственной  экономической политики. Правительства, фирмы, и люди, вовлеченные в международные  отношения, находят, что более важно  сегодня чем когда-либо прежде понять, как иностранные валюты проданы и что затрагивает их относительные ценности.

          В своей работе я исследую структуру, инструменты, и силы денежно-кредитных рынков, определяющих цену в мире.

 

 

 

 

                        1. The structure of the foreign exchange market.

The foreign exchange markets are among the largest markets in the world, with annual trading volume in excess of $160 trillion. The purpose of the foreign exchange markets is to bring buyers and sellers of currencies together. The foreign exchange market is informal in its operations: there are no special requirements for market participants, and trading conforms to an unwritten code of rules.

Almost every country has its own currency for domestic transactions. Trading among the residents of different countries requires an efficient exchange of national currencies. This is usually accomplished on a large scale through foreign exchange markets, located in financial centers such as London, New York, or Paris—in order of importance — where exchange rates for convertible currencies are determined. The instruments used to effect international monetary payments or transfers are called foreign exchange. Foreign exchange is the monetary means of making payments from one currency area to another. The funds available as foreign exchange include foreign coin and currency, deposits in foreign banks, and other short-term, liquid financial claims payable in foreign currencies. An international exchange rate is the price of one (foreign) currency measured in terms of another (domestic) currency. More accurately, it is the price of foreign exchange. The changes in exchange rates affect the price and, therefore, the volume of imports and exports change. The exchange rate rises (falls) when the quantity demanded exceeds (is less than) the quantity supplied. Broadly speaking, the quantity of U.S. dollars supplied to foreign exchange markets is composed of the dollars spent on imports, plus the amount of funds spent or invested by U.S. residents outside the United States. The demand for U.S. dollars arises from the reverse of these transactions.

Many newspapers keep a daily record of the exchange rates in the highly organized foreign exchange market, where currencies of different nations are bought and sold. For instance, the Wall Street Journal shows the price of a currency in two ways: first the price of the other currency is given in U.S. dollars, and second the price of the U.S. dollar is quoted in units of the other currency. Pairs of prices represent reciprocals of each other. These rates refer to trading among banks, the primary marketplace for foreign currencies.

                  

                    2.  The functions of the international currency market.

         The functions of the international currency market - is an expression of its economic substance through the activity of the specific mechanisms of the market. All the features of the international currency market can be divided into two groups: general, a greater or lesser extent common to all other markets (and trade, and financial), and special features which are due to the economic nature of the international currency market.

         The international currency market performs functions common to all markets. Commercial function assumes that the international currency market provides all of the participants of foreign exchange and other international means of payment for foreign exchange transactions. The Value function of the international currency market - is to establish the level of the exchange rate at which international financial markets and the global economic system as a whole are in equilibrium. The information function of the international currency market - that market participants provide information about its functioning. Finally, the regulatory function provides the order and organization in the international currency market.

          Besides the general functions of the international currency market has a number of special functions. First of all, it is the international currency market, the conditions for implementation in an organized manner for International Settlements.

         As the international currency market is a structurally complex, dynamic system, it is under pressure many economic, political, psychological factors and responds to changing them. The level of uncertainty and unpredictability of the international currency market is much higher than in the commodity markets. Foreign exchange operations are always associated with the risk of loss for the difference in exchange rates. Currency risk is the possibility of incurring losses due to unfavorable changes in currency exchange rates. The international currency market mechanism creates foreign exchange risk insurance or hedging. This creates an extensive system of foreign exchange operations and techniques, the use of which requires special training for members of the international currency market.

           Function is inherent in speculative international currency market. The development of the global market is accompanied by a rapid increase in short-term liquid capital that can move quickly in search of speculative profits. The size of these capital amounts to about $ 1 trillion. Huge cash dollars are concentrated on the foreign exchange market to profit from speculating on the difference in exchange rates. In performing this function, an international exchange market helps the tide of international investment in highly profitable and effective areas of the global economy. Speculative and insurance functions of the international currency market is closely linked, and ensure conduct of a certain range of foreign exchange transactions.

         Function of the relationship with other sectors of the international financial market is ensured by the fact that all types of currency transactions in varying degrees, serve other sectors of the international financial markets: the credit, stock and insurance. This function is closely related to diversify foreign exchange reserves of banks, enterprises and governments.

                                3. Classification of foreign exchange markets.

      Currency markets can be classified into a number of grounds: on the field distribution in relation to foreign exchange restrictions on the types of foreign exchange reserves, the degrees of organization.

       In the field of distribution, or the breadth of coverage, can be distinguished international and domestic foreign exchange markets. International and domestic markets consist of a series of regional markets; financial centers are formed in certain regions of the world or this country.

        The international currency market meant a chain of closely related system of cable and satellite communications world regional currency markets. Between them there is a spillover of funds based on current information and forecasts of the leading market participants on the possible positions of the individual currencies.

         Domestic foreign exchange market – foreign market is one of the state, it operates within a given state. The domestic exchange market consists of intra-regional markets. These include foreign exchange markets with centers in the interbank foreign exchange markets.

         With respect to foreign exchange restrictions can distinguish free and unfree currency markets.

         Currency restrictions - a system of government measures to establish the order of conduct of operations with currency values. Currency restrictions include measures to regulate target payments and transfers of national and foreign currency abroad.

       By type of currency used by the foreign exchange market can be a single mode and dual mode.

         Market with a single mode - it is the foreign exchange market with the free exchange rates, i.e. with floating exchange rates, the quotation which shall be established on the stock exchange.

         Foreign exchange market with a dual mode - a market with the simultaneous use of fixed and floating exchange rates. The introduction of dual exchange market is used as a measure of state regulation of capital flows between the national and international market for loan capital. This measure is intended to limit and control the impact of the international market of loan capital to the economy of the state.

       According to the degree of organization of foreign exchange markets are exchange and OTC.

      Exchange currency market - it is an organized market, which is represented by the currency exchange. Currency exchange is a transaction in cash or cashless exchange of national banknotes and coins in accordance with the exchange rate. The Exchange is not a commercial enterprise. Its main function is not to obtain high profits, and in the mobilization of temporarily free funds through the sale of currency and securities in foreign currency and exchange rate setting. Exchange currency market has a number of advantages: the cheapest source of currency and foreign exchange; applications offered for exchange trades, have the absolute liquidity.

      OTC foreign exchange market is organized by dealers, who may or may not be members of the currency exchange and lead him by phone, fax, computer networks. Exchange and OTC markets to some extent contradict each other and at the same time complement each other. This is due to the fact that by performing a general function of trade exchange and circulation of securities in the currency they use different methods and forms of realization of foreign currency and securities in foreign currency. In the classification of foreign exchange markets Eurocurrency release eurobonds, Eurocredit and EuroDeposit.

          Eurocurrency market - the foreign exchange market in Western Europe, where the operations take place in the currencies of these countries. Eurocurrency market functioning is related to the rate of non-cash deposit and lending operations outside of the countries issuing those currencies.

          Eurobond market is a financial ratio of long-term loans in the Eurocurrency, which can be taken in the form of bonds of borrowers. The bond contains data on the amount of debt, repayment terms and conditions, obtaining the interest in accordance with the coupons.

          Coupon - part of the bond certificate, which gives the holder the right to receive interest.

          The market is EuroDeposit financial relationships on the formation of deposits in foreign currencies at commercial banks of foreign countries out of the funds traded in the Eurocurrency market.

   

              4. The participants of the foreign exchange markets.

Foreign exchange market is extremely competitive, so there are many participants in the market.

 The central institution in modern foreign exchange markets is the commercial bank. Most transactions of any size in foreign currencies represent merely an exchange of the deposits of one bank for the deposits of another bank. If an individual or business firm needs in foreign currency, bank contacts, which, in turn, provide storage, expressed in foreign money, take delivery of foreign currency, if the customer requires it. The large banks may hold reserves of foreign currency for placement of their clients. Smaller banks generally do not hold foreign currency or foreign currency deposits. They are associated with larger correspondent banks, which in turn refer to foreign exchange dealers.

The major international commercial banks act as both dealers and brokers both. Big international commercial banks act as dealers and brokers. In the role of dealers, banksseek to capitalize on expected changes in exchange rates.  

Often, foreign merchant banks do not work directly with each other, but rely on the foreign exchange brokers. These firms are in constant communication. Their main function is to reconcile the currency buyers and sellers. 

 Security brokerage firms, traders, insurance companies, and scores of other nonbank companies have come to play a growing role in the foreign exchange markets today. These Nonbank Financial Institutions have entered in the wake of deregulation of the financial marketplace and the lifting of some foreign controls on international investment, especially by Japan and the United Kingdom. Nonbank traders now offer a wide range of services to international investors and export-import firms, including assistance with foreign mergers, currency swaps and options, hedging foreign security offerings against exchange rate fluctuations, and providing currencies needed for purchases abroad.

In main all participants of an exchange market are usually divided on two groups. The first group of participants is called speculators; by definition, they seek to profit from anticipated changes in exchange rates. The second group of participants is known as arbitrageurs. Arbitrage refers to the purchase of one currency in a certain market and the sale of that currency in another market in response to differences in price between the two markets.

               5. Instruments of the foreign exchange markets.

• Cable and Mail Transfer.

Some financial instruments are used to facilitate trade in foreign currency. One of the most important is the transfer of telegrams, running errands, sent by a foreign bank current account. Cable seller sends to the bank debit the seller and the buyer's credit account.

A significant advantage of a wire transfer - speed, because the transaction can be executed on the same day or within one or two business days.

When the speed is not the critical factor may be used by the transfer of mail order foreign currency. Such transfers are written orders from the holder of foreign currency deposits to the bank to pay a designated person or institution. To send mail can take days, depending on the speed of the delivery address.

• Foreign Currency and Coin

        Foreign currency and coin itself (as opposed to bank deposits) is an important instrument for payment in the foreign exchange markets. This is especially true for tourists who require pocket money to pay for lodging, meals, and transportation.  For example, U.S. banks operating along the Canadian and Mexican borders receive a substantial volume of Canadian dollars and Mexican pesos each day. These funds normally are routed through the banking system back to banks , and the U.S. banks receive credit in the form of a deposit denominated in a foreign currency. This deposit may then be loaned to a customer or to another bank.

                                 6. Foreign exchange rates.

        Determining foreign exchange rates .

The prices of foreign currencies expressed in terms of other currencies are called foreign exchange rates. There are today three markets for foreign exchange: the spot market, which deals in currency for immediate delivery; the forward market, which involves the future delivery of foreign currency; and the currency futures and options market.

Dealers and brokers in the foreign currency is actually selected to install not one, but two, the exchange rate for each currency pair. That is, each seller sets the price of sale. Diler a profit on the difference between the purchase price and sale price, although this distribution is usually very small.

          7. Factors affecting foreign exchange rates.

                    Domestic Economic and Political Conditions

The market for foreign currency, of course, depends on internal conditions. Wars, revolutions, political leader's death, inflation, recession, and labor strikes, adverse impact on the currency of the nation. On the other hand, signs of rapid economic growth, rising stock and bond prices, and successful economic policies in the management of inflation and unemployment usually lead to a stronger currency at the exchange markets.